IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20150604

Docket: 12-4341

Registry:
Victoria

Between:

Beverly Elaine
Esther Tenhunen

Plaintiff

And:

Kim Tenhunen

Defendant

Before: 
The Honourable Mr. Justice Johnston

Reasons for Judgment

(On
Costs)

[1]           
This action, in which damages were claimed for
breach of duties under the Occupiers Liability Act, R.S.B.C. 1996, c.
337, resulted in an equal division of liability between plaintiff and
defendant, with the plaintiff’s damages assessed at $250,182.38 before
apportionment for contributory negligence. The reasons for these results can be
found at 2015 BCSC 26.

[2]           
The plaintiff now seeks 100% of her costs in
spite of the division of liability, asking that the court exercise its
discretion under s. 3(1) of the Negligence Act, R.S.B.C. 1996, c. 333.

[3]           
The plaintiff also seeks double costs after
October 10, 2014, when she offered to settle her claims for $100,000 plus
costs, or in the alternative double costs after October 30, 2014, when she
delivered a new offer in which she said she would accept $80,000 plus costs.

[4]           
The October 10, 2014, offer was open for
acceptance until 4:00 p.m. on October 23, 2014. The October 30, 2014, offer was
open until the commencement of trial. Neither offer was accepted by the
defendant.

[5]           
The plaintiff’s claims sounded in occupiers’
liability. The defendant denied liability and argued in the alternative that
the plaintiff failed to take reasonable care for her own safety.

[6]           
The plaintiff slipped and fell from a ramp built
by the defendant outside the defendant’s rental house.

[7]           
The plaintiff’s major injury was a fracture in
her knee, with resulting ligament instability.

[8]           
The trial proceeded on November 3, 2014, and
lasted five days, with judgment reserved.

Full Costs

[9]           
The plaintiff’s first submission is based on s.
3(1) of the Negligence Act, which provides:

3  (1)    Unless the
court otherwise directs, the liability for costs of the parties to every action
is in the same proportion as their respective liability to make good the damage
or loss.

The plaintiff submits that the court should
exercise the discretion conferred by the statute to award her full costs in
spite of the division of liability.

[10]       
The defendant submits that the court should
apply the “usual rule” and apportion costs in the same way as liability, the
rule that has been accepted since the decision in Flatley v. Denike
(1997), 144 D.L.R. (4th) 450 (B.C.C.A.).

[11]       
That was the issue in Moses v. Kim, 2007
BCSC 1820, where the trial judge apportioned fault for an accident at 65% to
the plaintiff pedestrian, 35% to the defendant driver, and then exercised her discretion
to award the plaintiff 90% of his costs, listing eleven factors relevant to the
exercise of discretion.

[12]       
Both parties argued this application on the
basis of the eleven factors set out in the trial decision in Moses, but Moses
went to appeal, including on the costs issue: Moses v. Kim, 2009 BCCA 82.
The Court of Appeal reduced the trial judge’s eleven factors to six, and said
that one of those six – the plaintiff’s financial circumstances – was
considered in error by the trial judge. The five that remained were:

 1.       The plaintiff was
seriously injured and no longer employable;

 2.       The defence denied liability, arguing that the
accident was entirely the fault of the plaintiff;

 3.       The trial lasted nine days, with one day of
evidence relating to liability and one half day of argument on the liability
issue;

 4.       Damages awarded were $218,050; and

 5.       The plaintiff’s calculation of taxable costs was
approximately $84,000.

The Court of Appeal added its own
considerations, including:

 6.       The plaintiff’s award of $218,050 amounted to
about a quarter of what he had sought and a third of what he proved at trial;
and

 7.       The trial judge had failed to consider the
defendants’ degree of success on their claim of contributory negligence.

[13]       
Employing these criteria, the Court of Appeal
reduced the plaintiff’s costs recovery from 90% to 75%. I will apply the
factors listed in the appellate decision as a non-exhaustive set of criteria.

[14]       
Ms. Tenhunen’s injuries were more than trifling.
They have not prevented her from working but have caused the plaintiff
discomfort and inconvenience at her job. I consider this factor relatively
neutral.

[15]       
The defendant denied liability throughout, culminating
in a “no evidence” motion at the close of the plaintiff’s case. This was in
spite of the defendant’s knowledge that the ramp she had built herself had no
guard or handrail, and despite the defendant having it pointed out to her that
the slope of the ramp was greater than provided in the Building Code when the
plaintiff’s expert report was delivered. This factor favours an increase in the
plaintiff’s costs recovery beyond the “usual rule” reflecting the division of
liability.

[16]       
The trial lasted five days, during which the
plaintiff testified slightly longer about liability issues than quantum issues.
The plaintiff’s other witnesses called to support her damages claims took no
more than another day, and the balance was devoted to liability. The plaintiff
testified all of the first day and somewhat more than an hour on the second
day. As a rough assessment, I estimate that about 60% of the evidence portion
of the trial, in which I include a voir dire on the admissibility of an
expert report and the defendant’s no evidence motion, was devoted to liability.
The rest was devoted to proving damages. This factor very slightly favours
leaving costs at the same proportion as the liability division.

[17]       
The damages awarded were just over $125,000
after reduction for contributory negligence, which represents success on the
plaintiff’s part. This factor favours an increase in the cost recovery.

[18]       
The plaintiff has presented a draft bill of
costs that shows 170 units claimed, for $18,700 before taxes on the costs
portion, and $21,597.75 in disbursements. With taxes the bill as presented
totals $42,541.75. This factor is somewhat difficult to evaluate, as in every
case where liability is divided, and a defendant has suffered no damage, the
plaintiff will recover a portion only of his or her costs of succeeding. Full
costs have never been intended to fully indemnify a party who has been
compelled to incur often substantial expense to establish a right to recover
damages, and the situation is always worse when liability for damages is
divided, and recovery only partial. There continue to be incentives to both
parties to settle before trial.

[19]       
The defendant was equally successful on the
issue of contributory negligence, which I repeat took over half of the trial
time. This factor is neutral in my view.

[20]       
In all of these circumstances, I am persuaded
that this is a case where I should exercise my discretion to deviate from the
ordinary rule as set out in s. 3(1) of the Negligence Act, and the
plaintiff shall recover 65% of her costs.

Double Costs

[21]       
Both parties made offers to settle prior to
trial, thus Rule 9-1(5) and (6) are applicable. They provide:

9-1(5) Cost options

(5)        In
a proceeding in which an offer to settle has been made, the court may do one or
more of the following:

 (a)        deprive a party of any or all of the costs,
including any or all of the disbursements, to which the party would otherwise
be entitled in respect of all or some of the steps taken in the proceeding
after the date of delivery or service of the offer to settle;

 (b)        award double costs of all or some of the
steps taken in the proceeding after the date of delivery or service of the
offer to settle;

 (c)        award to a party, in respect of all or some
of the steps taken in the proceeding after the date of delivery or service of
the offer to settle, costs to which the party would have been entitled had the
offer not been made;

 (d)        if the offer was made by a defendant and the
judgment awarded to the plaintiff was no greater than the amount of the offer
to settle, award to the defendant the defendant’s costs in respect of all or
some of the steps taken in the proceeding after the date of delivery or service
of the offer to settle.

9-1(6) Considerations of court

(6)        In
making an order under subrule (5), the court may consider the following:

 (a)        whether the offer to settle was one that ought
reasonably to have been accepted, either on the date that the offer to settle
was delivered or served or on any later date;

 (b)        the relationship between the terms of
settlement offered and the final judgment of the court;

 (c)        the relative financial circumstances of the
parties;

 (d)        any
other factor the court considers appropriate.

[22]       
The plaintiff seeks double costs after the
second of her three offers to settle.

[23]       
The history of the offers to settle starts with
the plaintiff, who offered to accept $160,000 plus costs by letter dated June
6, 2014. On October 10, 2014, the plaintiff offered to accept $100,000 plus
costs. This offer was open until October 23, 2014. It was not accepted. On
October 30, 2014, the defendant offered to settle for $40,000 all-inclusive of
costs and disbursements, this offer open until 9:30 a.m., November 3, 2014, the
day the trial started. Also on October 30, the plaintiff offered to accept
$80,000 plus costs and disbursements, her offer to remain open as well until the
morning of trial. This offer was also not accepted.

(a)      Whether
the offer ought reasonably to have been accepted

[24]       
This factor is to be considered from the point
of view of the defendant as offeree at the time the offer was open for
acceptance, and should be considered independent of the result, that is,
without benefit of hindsight: Ward v. Klaus, 2012 BCSC 99 at para. 36.

[25]       
As well, how much time an offeree has to decide
whether to accept an offer can be a relevant consideration. A reasonable amount
of time in which to consider an offer has been held to be seven days: see Coquitlam
(City) v. Crawford, 2008 BCSC 1507; Arnold v. Cartwright Estate,
2008 BCSC 1575 at para. 22; Towson v. Bergman, 2009 BCSC 978. However,
there is no rule to that effect, and what is a reasonable time will depend on
the circumstances of the case: see Dodge v. Shaw Cablesystems Ltd.,
2009 BCSC 1765 at para. 14. In this case, the defendant had a reasonable
amount of time to consider the plaintiff’s offer, particularly in light of the
earlier and higher offer delivered October 10, 2014.

(b)      The
relationship between the offer and the result

[26]       
The award at trial is an objective measure of
the reasonableness of the offer and the decision to reject it. The plaintiff
was awarded slightly over $125,000 at trial after apportionment. She will
recover more than what she offered to accept.

(c)      The
relative financial circumstances of the parties

[27]       
The defendant’s principal argument is based on Rule
9-1(6)(c), as she points to her own unfortunate circumstances, subsisting
barely on a disability pension, and contrasts this to the far better financial
position enjoyed by the plaintiff, who had been employed on an income between
$77,000 and $101,511 in the five years between 2009 and 2013. The defendant
argues that this financial disparity militates against an order for double
costs. This submission, bearing in mind the evidence at trial, raises a logical
question of insurance coverage.

[28]       
The plaintiff and defendant are mother and
daughter, respectively. They were and are close. The defendant ordinarily lives
in the rented house where the plaintiff fell and suffered her injury, and from
the photographs submitted into evidence, that residence would not suggest an
ability to pay substantial damages. It is unlikely in the extreme that the
plaintiff would sue her daughter, and proceed to trial, if the only prospects
of recovery were limited to the defendant’s disability pension.

[29]       
While the defendant’s straightened finances
would argue against her being able to afford insurance premiums, those same
financial constraints would argue more strongly against the defendant being
able to afford to retain senior counsel for the entire action, or to offer to
settle her mother’s claims for $80,000 all-inclusive on October 30, 2014. I
recognize that an offer to settle is not a guarantee of payment, as it would
simply have entitled the plaintiff to enter judgment for the amount of the
offer, had she accepted it. In these circumstances, however, the plaintiff
would have every reason to know that her daughter had no ability to pay the
amount offered from her own funds.

[30]       
The defendant’s argument under Rule 9-1(6)(c)
made the question of insurance relevant to the costs issue, and by memorandum
to counsel I invoked Rule 7-1(4) and asked if there were a policy of insurance
to which the defendant could turn for indemnity. The Rule provides:

Despite subrule
(3), information concerning the insurance policy must not be disclosed to the
court at trial unless it is relevant to an issue in the action.

[31]       
Counsel for the defendant replied to this
question in this way:

Finally, and
more on the basis of a footnote, the Court has inquired as to whether there is
a policy of insurance that the Defendant may look to for indemnification of
damages and Costs. It would be entirely inappropriate for defence counsel to
make any submission as to whether Ms. Kim Tenhunen may or may not look to a
policy of insurance for indemnification. Defence counsel has a dual retainer in
the circumstances and owes an obligation to both the Defendant and to an
insurer not to compromise their respective interests: Professional Conduct
Handbook, Chapter 6.4(a-d).

[32]       
The Code of Professional Conduct for British
Columbia (BC Code) replaced the Professional Conduct Handbook
on January 1, 2013. I have examined the previous rule cited by counsel, and see
nothing there to prevent the disclosure requested. I have examined the BC
Code, with the same results.

[33]       
The most charitable interpretation of counsel’s
argument is that it is hypothetical. Even on that assumption, it still does not
respond to the question posed under Rule 7-1(4), and that is whether the
existence of a policy of insurance is relevant to the costs issue, and, if it
is, whether there is a policy of insurance available to the defendant in this
case.

[34]       
How a lawyer’s duties are supervised by the Law
Society – to both an insurer who retains the lawyer and the insured on whose
behalf the lawyer acts under the retainer – have little to do with the question
raised in this application. Nothing in the question put to counsel could raise
a risk of dividing counsel’s loyalties to an insurer and insured, assuming that
is the relationship that has existed.

[35]       
Counsel for the plaintiff has provided a copy of
the policy of insurance that the defendant was obliged to produce as part of
pre-trial document discovery. The argument against double costs based on the
parties’ relative financial circumstances ought not to have been made.

(d)      Any
other factor the court considers appropriate

[36]       
Neither party argued any other factor.

Conclusion

[37]       
The plaintiff’s offer of October 30, 2014, ought
reasonably to have been accepted. It was less than the plaintiff achieved
through trial. I infer that a party able to retain experienced counsel to
conduct litigation through a five day trial and beyond, and to offer to settle
for $80,000 before trial, is able to pay double costs.

[38]       
I order the defendant to pay the plaintiff 65%
of her costs at Scale B to October 30, 2014, and 65% doubled from October 30 to
the present, plus 65% of her disbursements throughout.

               “R.T.C.
Johnston, J.”            

The Honourable Mr. Justice Johnston